US jobless claims turn higher one week after touching 14

WASHINGTON (MarketWatch) - One week after falling to a 14-year low, the number of people who applied for U.S. unemployment benefits rose sharply last week but remained near a postrecession bottom.

Initial jobless claims climbed by 23,000 to 302,000 in the seven days ended July 26, retracing the entire decline in prior week, according to Labor Department data . The level of claims was in line with Wall Street expectations.

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Claims had fallen in the previous reporting week to a revised 279,000 - the number was initially reported as 284,000 - to reach the lowest point since May 2000. The economy 14 years ago was near the end of an Internet boom that drove the unemployment rate down to decade lows.

The big drop in claims earlier in July was probably triggered in part by annual summer shutdowns by some major U.S. manufacturers to retool their plants for new production. The shutdowns often cause the claims report to gyrate up and down in July.

Still, the latest level of initial claims remains near a postrecession bottom and continue to signal further improvement in the labor market. Layoffs are bouncing along modern record lows and job openings are the highest since the recession ended in mid-2009. The economy is also adding new jobs at the fastest pace in years.

As a result, the average of new claims over the past month fell by 3,500 to 297,250. It's the first time the monthly average has fallen below 300,000 since April 2006 and reflects an eight-year low. The four-week figure smooths out the jumpiness in the weekly report and offers a better look at underlying trends in the labor market.

A still-elevated unemployment rate, however, shows the economy is still not fully healed. The last time the four-week average of claims was that low was in 2006, when unemployment was around 5% compared to the current rate of 6.1%

Meanwhile, the government said continuing claims increased by 31,000 to a seasonally adjusted 2.54 million in the week ended July 19. Continuing claims reflect the number of people already receiving benefits.

In a separate government report, an index that measures the price of U.S. labor rose in the second quarter at the fastest pace since the fall of 2008, largely because of higher retirement and health-care benefits. The employment cost index climbed 0.7% in the second quarter after a 0.3% increase in the first quarter, the Labor Department said.

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